Bitcoin’s popularity is increasing day by day, and by expanding the rage, the number of bitcoin exchanges is also rising. There are a lot of bitcoin exchanges on the internet, and people are confused about which one we should choose. Some people do not know what bitcoin exchange is. Do not worry because, in this article, we will discuss why you should not select an exchange for bitcoin buying and selling. So without wasting time, let’s explore the reason behind not choosing bitcoin exchanges.
What is bitcoin?
Bitcoin is the popular globally accepted cryptocurrency that became a trend a few years after launching in 2008 by Satoshi Nakamoto. Bitcoin is a decentralized system that means no third parties can manage the bitcoin, even the founder of bitcoin, Satoshi Nakamoto.
What is an exchange?
Bitcoin exchanges are the third parties that provide extra features to the bitcoin users and charge some percentage of fees for providing these services. To know more, click here profit revolution .
Many people use exchanges because exchanges provide a lot of services that bitcoin exchange is not providing. Bitcoin exchanges are a centralized system that means individuals or groups of individuals regulate or operate the exchange. They have all the information, and they can share your information with the government when required.
The main motive of starting bitcoin is to make decentralized transactions where no one can control the currency. Still, exchanges are a decentralized system that means it is against the objective of bitcoin.
Why people use exchanges: –
There are a lot of services provided by a bitcoin exchange to bitcoin users to make things easy. There are the following services that the exchanges offer given below: –
- Trading bitcoins or other cryptocurrencies
- Investing bitcoins or other cryptocurrencies
- Buying and selling of bitcoin or other coins
- Transferring and receiving from exchange wallet to another wallet
- Quickly deposit and withdraw money into a bank account.
- Instant transactions
When you do transactions on another wallet, your transaction id will display on the blockchain, and anyone can see your public id and the amount you spend. People want extra privacy so everyone cannot see their transaction id. Bitcoin exchanges are providing the in-built service wallet service. When you do the transaction with the help of an exchange, no one can see your transaction id because it will automatically generate a random address.
Why should you not use bitcoin exchange?
- Centralized system: – Bitcoin exchanges are a centralized system that means controllers or managers behind the exchange manage the transactions. They track your transactions and can suspend your account anytime if you break their terms and conditions. Bitcoin has come into existence to make the currency noncontrollable, but exchanges are making it controllable currency.
- Chances of Hacking: – Some exchanges got hacked because of their security issues. Since Bitcoin exchanges are centralized systems, this is the central point of failure. If the exchange you are using gets hacked, all the users will lose all the coins or money. The exchanges that got hacked lost a lot of coins worth millions or billions of dollars. Once you lose your coin, you cannot sue in court to get your money back because bitcoin is a decentralized system that means the government cannot control it.
- No Privacy: – When people create an account on the bitcoin exchange, they have to fill in their personal information at the time of signups, such as their first name, last name, address, mobile number, and email address. After creating the account, they have to complete their KYC by uploading the identity documents such as passport or license, signature, and live selfie. They have all your information, which means they can give your transactions report to the government when required. So, there is no privacy.
- High fees: – Bitcoin exchange provides extra services to the bitcoin users that make buying and selling easy. If you are a trader, then they will charge the transaction fees that you earned. If there are a lot of services, that means costs will also be high.
- No Access over keys: – Bitcoin exchanges provide their in-built wallets for storing the coins called exchange wallets. You do not have the private or public key like the other bitcoin wallet. This is because there are the controllers or managers of the bitcoin exchange controlling the wallets of every user on an exchange. So, you do not have access to bitcoin private and public.